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April 30, 2009
Developers Say Labor Pact Saves Less Than Claimed
The NY Times
By Charles V. Bagli
Construction union concessions sought by NYC developers could yield as much as a 20% savings on labor costs, though that may only translate into a 5-12% overall reduction in project costs.
The agreement, which claims to cut project costs by “an average of 16 to 21 percent,” is all but finished and a news conference still expected. More than a dozen projects have lined up to participate. But, developers and bankers say, that does not necessarily mean that any of them will proceed. The matter has become an object lesson in the intricate dance steps of New York politicians, real estate executives and union officials.
Though representatives for Atlantic Yards developer Bruce Ratner have recently denied that the company's Beekman St. project is being topped out at half the planned height, reporter Charles Bagli cites the Frank Gehry-designed tower as an example of a project stalled mid-development in hopes of securing labor concessions:
The developer Bruce Ratner recently stopped work at the 38th floor of his planned 76-story Beekman Tower downtown, threatening to cap the building at 40 stories if he did not get concessions. Real estate executives say, however, that part of why Mr. Ratner — and others — are struggling is because annual rents are about one-third less today than the $80 per square foot that had been projected.
NoLandGrab: Possibly, in the case of Ratner's Beekman St. project, slow progress on the labor agreement is a scapegoat. Aside from the downward market projections mentioned above, parent company Forest City Enterprises has been struggling to keep up with debt maturities, has stopped or slowed work on many large-scale projects and put premium retail properties up for sale.
Posted by lumi at April 30, 2009 5:40 AM